Symantec earnings beat hopes

A tightened business plan and growth in Latin America and Southeast Asia mean better-than-expected earnings for the antivirus software maker.

2 min read
Symantec (SYMC) today reported higher-than-expected earnings for its first quarter, boosted by a more focused business plan and growing markets in Latin America and Southeast Asia.

The antivirus maker posted net income of $135 million, or 32 cents a share, for the quarter ending July 4, compared with net profits of $109 million, or 8 cents a share, a year ago. Analysts were expecting earnings of 30 cents a share, according to First Call, which tallies analyst estimates.

Howard Bain, Symantec's chief financial officer, said the improved earnings were attributable to a better focus on the business.

"We are not investing in products that aren't growing," Bain said, adding, "We have taken a strong competitive stance against McAfee, seen a resurgence in our WinFax product, which is now much more responsive to what customers need, and seen growth in our utility products."

Bain also noted that growth in Latin America was up 102 percent this year, while Southeast Asia jumped 63 percent.

"They obviously had a strong quarter and the balance sheet improved," said John Powers, an analyst with Robertson Stephens. But Powers added that McAfee is still the corporate market leader and has struck a number of strategic partnerships, including participation in the SecureOne alliance with cryptography firm RSA Data Security, its parent Security Dynamics (SDTI), and certificate authority VeriSign, which deal was announced today. (See related story)

Still, Symantec's earnings report is welcome news for the company, which has been waging a war against its archrival McAfee.

In April, Symantec took McAfee to court, alleging that McAfee had "knowingly stolen" code from Symantec's CrashGuard product for its PC Medic software. This month, the company upped the ante. Symantec amended the complaint, saying that an independent third party had confirmed that McAfee had used additional code copied from Symantec in other McAfee products, including VirusScan, the company's flagship product.

McAfee is filing a countersuit against Symantec for defamation and tort of business interference.

Wall Street, meanwhile, appears unconcerned about the legal battles.

"I think it is very entertaining to watch the rivalry being played out in public," said Powers.